QUESTION:

Dear Marty,

Whether in a Phase-transition or a Slingshot Move in the Dow, you made it very clear that such moves will be driven by capital inflows to the USA due to the alternative flight to quality to the private sector, both internationally and domestically. It is now just so obvious, it is unfolding in front of our eyes.

The question, however, will be whether capital will remain parked there for long time, or else leave abruptly to go elsewhere? For as high as it can go, that market sooner or later will eventually run out of steam, just like any other system. We are now focusing on the flows towards it, but can you please shed a light on what will come next? Will there be a trade to the downside too? Where will all that capital go at that point, simply repatriate, go to Asia? Your knowledge and wisdom on this would be highly appreciated.

Thanks in advance.
SB

ANSWER: What goes up must also come down. A Phase Transition is the culmination of a collapse in public confidence which is now rising before our eyes.. The question really becomes rather blunt. Will we simply readjust? Or will we crash and burn? This appears to be the end result of socialism. Therefore, we are more likely to see at this time a collapse of the world monetary system. A rise in the dollar will break the back of the US economy and that is what is needed to create the next step toward monetary reform.

We are most likely going to see a new monetary system where the dollar will no longer be the reserve currency. That will probably become some form of a basket. This is the collapse of the West just as Communism collapsed and altered the course of China and Russia. Therefore, we are looking at the shift of the financial capitol of the world from the West to the East dominated in India/China. As we can see, the financial Capitol of the World always migrates.  After Rome and the fall of Byzantium, the capital moved to India. It then moved to China. When Christopher Columbus set sail, he was trying to get to India because that was where all the money was. You do not set sail to be to a slum in a third world country. Europe was rising, but it had been reduced to a third world status.

The other side of a Phase Transition will be the fall of the West. That is just how things evolve. We are plagued with politicians who are incapable of making any changes to save the country because they are too busy grabbing the free soap in the hotel room. Republican National Committee chairman Reince Priebus responded to Donald Trump’s recent complaints that the nominating process is rigged against him by saying: “Give us all a break.” Priebus demonstrated by his response that the game is rigged. He said: “Nomination process known for a year + beyond. It’s the responsibility of the campaigns to understand it. Complaints now? Give us all a break.”  Priebus is an American attorney and politician so he is a trained and know how to lie when necessary. Note what he says: “Give me a Break”. He does not deny anything nor does he say Trump is wrong. He simply says they rigged the voting system more than one year ago so why complain now. This is a typical response designed to fool the majority as if Trump is wrong. All he is saying you knew this was the game so it is not fair to complain now after a year has passed. Priebus did not deny anything Trump had to say. He only said you did not complain soon enough. This is like someone who robs you and they justify keep your goods claiming you should have complained before. Yes, Priebus, give us a break from this clever double-talk. Unfortunately, this is the classic example of how dishonest politicians have become. There is no honor nor is there any accountability. They will distort and twist things around right before your eyes and do not care because the media will never analyze what they just said. This is why we just have to crash and burn. We cannot reform with people like this trying to maintain an unfair system.

Judge John Walker, Jr

The Second Circuit back in March refused to reverse a contempt order imposed on an allegedly recidivist stock fraudster. What is amazing is Judge John Walker, Jr, Bush’s cousin,  grabbed his appeal and really abused his power. This guy should be driven from the court with tar & feathers like in the old days. Edward A. Durante, was sued by the SEC over a purported stock manipulation scheme involving Internet technology company Wamex Holdings Inc. Durante’s challenged the contempt order stating the contempt is not supported by clear and convincing evidence. No contempt in New York city ever complies with the constitution in federal court that I have ever seen.

Durante plead guilty to criminal charges based on the same conduct and was imprisoned from 2002 to 2009. He had paid over $35 million in assets handing them to his former attorneys in 2002 for restitution in the criminal case. He argued that the SEC has failed to show he had not been compliant with the government. The SEC contended that Durante was still on the hook for over $25 million to them. Durante argued that the default judgment was ambiguous, since it purported to be a disgorgement order yet also required Durante to turn over assets already seized by and relinquished to the government. Durante claimed he had already marshaled his assets for the government before his sentencing in 2003, and said SEC lawyers affirmatively represented to him in 2004 that the judgment was satisfied.

Nevertheless, Judge Walker found that because the default judgment instructed Durante to pay the funds to the “clerk of court”, any disgorgement by assignment or transfer of assets to a third party was irrelevant. So in other words, every agency can go after you for the same amount of money because Walker effectively held that if you paid even in full to one agency, it does not matter and cannot be credited toward another. There is absolutely no foundation in law for Judge Walker’s abusive pro-government decision.

Now this week, another contempt was imposed in New York City federal court confirming anyone who has any account tied to a New York entity should get the hell out of town and fast.  New York U.S. District Judge Paul A. Engelmayer on Tuesday said the founder of defunct hedge fund ThinkStrategy Capital Management LLC, who owes the SEC and others nearly $30 million, is still in contempt of court and must remain incarcerated indefinitely. Engelmayer said he was troubled by the lack of effort on the part of Chetan Kapur to show that he doesn’t have access to significant assets or to help his attorneys gain access to an email account which may shed light on whether or not he has funds in overseas bank accounts. In other words, he is in prison and will not be released until he PROVES he has no money overseas. The SEC has flipped the law so you are now guilty until you prove yourself innocent.

Now Kapur’s lawyers are considering taking legal action in D.C. federal court to compel the International Consortium of Investigative Journalists (ICIJ) to release the information from the Panama Papers on Kapur so they can prove this negative. So the ICIJ have all these documents which they are REFUSING to release probably because it impacts people they support like Hillary, and the public really does not know the full truth. This case may be very interesting since the only way for Kapur to now get out of prison is to prove he does not have funds overseas. Contempt is supposed to be “coercive” so this requires you to do something that the court “knows” you can do. To imprison someone indefinitely because he “might” have funds overseas you do not know about is exactly opposite of the law and violates human rights. You cannot prove a negative and there is no possible way any federal judge in New York would ever believe a citizen over the government. It will NEVER happen. There have been a few exceptions of an honest judge. But they are rare indeed.

No one should have any account in New York City simply because they can do whatever they want and you have no chance of going to court and getting a fair heading against any of the New York bankers. Just stay the hell out of that town. MY STRONGEST ADVICE – DO NOT HAVE ANY ACCOUNT WITH ANY INSTITUTION DOMICILED WITH ITS HEADQUARTERS IN NEW YORK CITY. The Southern District of New York will protect the banks 120% against any customer. Deal ONLY with institutions domiciled in other states (NOT A BRANCH OF A NEW YORK BANK OR BROKER). It is impossible to obtain a fair trial in NYC and Judge Walker will deny you a trial under the pretense that a judge’s personal desire for power supersedes the constitution and still has the powers to act as they did under King George III. In other words, the American Revolution did not change any powers of a judge. Congress passed a limited to civil contempt of 18 months imprisonment maximum, 28 USC 1826. Judge Walker has ruled judges have “inherent” power that Congress cannot override and due process of law has no restraining impact.

The reason we seriously need a new Constitutional Convention is because the current one has been reduced to a scrap paper. President Obama’s outrageous suggestion that mishandling classified documents in the case of Hillary Clinton is not necessarily a criminal offense only serves to illustrate that this is purely politics. Hillary belongs in jail and what she did was for personal gain whereas Obama calls Snowden a traitor for leaking documents that exposed government lies. He wants to imprison Snowden for life while excusing Hillary for a life of crime getting donations from foreign governments selling influence as Secretary of State. Obama’s intention to keep a prominent Democrat out of jail so the Democrats can win is a low-life corrupt act demonstrating it is who you know that counts and the rule of law means nothing. He is even seeking an 18% increase in pay TAX FREE for past presidents to enrich himself.

Obama tries to justify not prosecuting Hillary pointing to the complexity of U.S. law regarding secrets. Neverthless, it has been his administration which has brought far more prosecutions for any disclosure of classified information under the Espionage Act of 1917 than all other presidencies combined. Obama is playing the political card knowing that the press will not expose the truth and a Democratic victory is far more important than the rule of law.

Even the Romans created the office of the Tribune who could bring any official to justice. We have the Inspector General which is mimicking the Roman Tribune, but it has no power to act independently and prosecute politicians which was the entire purpose of the Tribune. Without an independent Inspector General, which who could indict even the President, we do not stand a chance of a fair government.

We need a Constitutional Convention to rewrite the Constitution. Of course, that would be a preventative measure reforming corrupt politics. Therefore, it will NEVER take place until we crash and burn. Then, and only then, is reform possible. The corruption is so prevalent, this reminds me of reaching the crossroads of Didius Julianus (193AD). The Praetorian Guard, or what we would call the Secret Service today, outright murdered the Emperor Pertinax (President) and the full corruption of Roman bureaucracy burst forth. After parading around with the head of Pertinax on a pole, the Guards withdrew to the safety of their camp. No clear heir was available so the Guards stationed heralds on the wall to announce openly that the office of Emperor was up for sale to the highest bidder.

Thus began perhaps the most scandalous affair in Roman history. The corruption had reached such open levels that the decline and fall of the Roman Empire began at this moment in time. There were two rival bidders who presented themselves – Titus Flavius Sulpicianus (father-in-law of Pertinax) and Marcus Didius Julianus. Didius’ bid was 25,000 sestertii per man, which was the high bid and he was duly declared Emperor.

Didius Julianus quickly found himself in serious trouble. The treasury had been depleted much more so than he had expected and minted coins to pay the bribe he promised reducing the weight and metal content. When the outrage led to outright civil war, Julianus found himself deserted by the Praetorians who were not about to defend him against Roman legions marching against them. Julianus was officially deposed by the Senate and sought refuge in his deserted palace. He was beheaded on June 1st/2nd, 193AD after a reign of only 66 days.

Have we reached our crossroads in open political corruption?